JC Penney Case Summary

“Fair and square” strategy
Johnson recently intended to transform JC Penney from a department store chain into a retail powerhouse. based on his previous experience at Apple and Target, Johnson began to create about 80 high brand stores inside JC Penney stores, such as Martha Stewart boutique, besides offering services to customers like promotions; free ice creams and hot dogs in July. The main strategy for the new plan is that instead of deep discounts to appeal customers, the company will offer three pricing strategies: Daily, month long value (events such as back to school), and best prices (big sales). Every day prices of J.C. Penney’s won’t be as low as the deep discounts that offered once; in a trial to persuade customers not to wait
Most of the products are homogenous. comparing to Apple, it has its own products that can support its sales, and that’s why such a strategy may be successful for Apple. Discounts, especially the deep ones, was the only way that guarantees high sales while selling undifferentiated product. Moreover, if competitors reduce more prices on similar products, J.C. Penney’s cannot reduce more because it has already fixed. On the other hand, most customers didn’t like the new pricing plan because they used to receive JCP coupons and the week’s specials ads; leading them to leave the stores. JCP tried to take advantage of the Business-to-business relationships, through signing “Martha Stewart Deal” granting JCP exclusively to distribute her products. However, Martha has similar contract with JCP’s competitor “Macys”. The new pricing strategy didn’t show marked-down prices, JCP removed it from being next to the original higher price. Neglecting the fact that this feature is a huge one in attracting the customers to buy the products. For example, buying a $20 pair of jeans sounds good, however getting an $20 pair instead of original price $60 feels awesome. For some customers, JCP appeared somehow expensive without this trick. JCP left its customers confused, the prices of the “Every Day” means that most of the items won’t be on sale as they are already discounted. All these reasons affect the bottom line
As it was declared earlier that JCP target was to offer customers stylish products and in the same time affordable ones, by making deals with well-known brands. And that is the difference between JCP and target. JCP doesn’t want to put itself within the lower end retailers. It wants to have its own improved line with high-end brands such as Sephora and Martha Stewart, but with somehow reasonable prices. Apple is mainly a software company that focus on specific category of customers; who are passionate about technologies and new devices innovations, and this is not happening in JCP. As it sells everything such as clothes, cosmetics, home furniture’s, etc. Apple customers need to have specific knowledge to be able to use its products, but JCP customers don’t have